Tax compliance management systems for businesses

Complex tax legislation and changes to the rules can result in mistakes being made by businesses when it comes to tax matters. An efficient tax compliance management system helps to prevent mistakes and avoid sanctions.

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: The idea of fitting one’s tax return on a beer coaster is never likely to become a reality. On the contrary, tax legislation is becoming more and more complex and opaque due to constant changes to the rules and regulations. This makes it increasingly difficult for businesses and corporations to manage their tax affairs in the proper manner. If mistakes are made, those concerned may be faced with criminal prosecution for tax offences. It is also possible for a company’s executive bodies to be taken to court if they fail to ensure that tax affairs are handled in a proper fashion. If this happens, managing directors and other executive bodies may be liable with their private assets. Even if they have already left the company, they continue to be liable for any taxes with respect to which a final assessment has yet to be made.

Setting up an efficient tax compliance management system is therefore essential for many businesses. Lawyers who are experienced in the fields of tax law and commercial law can advise on establishing a tax compliance management system to ensure that an appropriate balance is struck between tax optimization and minimizing the risk of liability. In an ideal scenario, it should be possible to integrate the control system into an existing compliance management system.

When setting up a tax compliance management system, it is important to account for the specific structures and requirements pertaining to a given company and develop a tailored solution. This has to cover the persons involved and the relevant authorities as well as clearly define any responsibilities. In doing so, it is not enough to simply establish operational-, information- and monitoring systems; it is also necessary to regularly review the reliability of these systems and, where appropriate, expand, renew or change them.

Efficient tax compliance management systems ensure, among other things, that deadlines are met and all notification-, documentation- and declaration obligations are properly discharged, thus avoiding trouble with the tax authorities and a possible criminal prosecution for tax offences. Consistent monitoring makes it possible for companies to optimize their tax burden and at the same time reduce to a minimum the risk of liability for executive boards, managing directors and other executive bodies. This is of particular interest to companies that operate internationally, as they not only have to observe national tax legislation but also international regulations.

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